Investment Strategy after the Crisis

Michael Spence:

Michael Spence is the 2001 Nobel Laureate in Economics, and Professor Emeritus, Stanford University. He chairs the Commission on Growth and Development.

 

 

 

MILAN – Investors have been hit hard by the current crisis. Lessons are being learned and investment strategies revised. 

 

The central lesson for investors seems to me to be that not all components of risk are static, but rather evolve in ways that are not yet fully understood – and that government regulation cannot fully address. For that reason, the ability of markets to self-correct should play a role as well, which requires that investment strategies attempt to take the possibility of systemic risk into consideration. 

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Copyright: Project Syndicate 2009

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